mayor's budget estimate january 2016

8/20/2019 Mayor's Budget Estimate January 2016

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City of Cleveland Managers Update

2016 Mayor’s EstimateFebruary 1, 2016



Where We Are Now…

• Despite economic growth in our area, the City’s revenue remains flat. TheCity receives no direct benefit i.e. sales tax, business tax (Commercial Activity Tax) from the development of restaurants, hotels and businesses inGreater Cleveland. We will receive admission, parking, and bed taxes.

• Our municipal budget is supported primarily by income taxes (60%) andproperty taxes (6%) of the City’s total budget (66%).

• We continue to have challenges to our tax base like House Bill 5 (effective2016) and requests for exemptions from municipal tax collection byprofessional sports players and executive level professionals will adverselyaffect income tax collection.

• We’ve been under cost control mode for some time now. Our ability tomaintain and enhance services into the future will require additionalrevenue streams.

• Successfully controlling costs has allowed us to preserve our current workforce and the delivery of services to this point.

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Review of City Finances

• For the last 10 years, revenue has not kept pace with the increasein expenses but going forward we will have additional expenses: – Wages, benefits, health care

– Fuel and utilities

• In addition we will see increase in cost with the Consent Decree,

Union Negotiations and Wage Driven Costs.

• The global recession and state budget cuts led to significantpermanent revenue losses for the City:

– Permanent annual loss of $18 million property tax foreclosure crisis.

– Permanent annual loss of $30 million in local government fund (LGF),

co

mmercial activities tax, tangible personal property tax and estatetax.* Since 2010, the accumulated annual loss from State of OhioRevenue loss is $111.3 million.

– Additional annual loss of $13.2 million between 2014 – 2015 (Camera

enforcement program, fines & forfeitures etc.)

* In 2010 the City lost $26 million in income tax alone.3



Review of City Finances (Continued)

• Contract negotiations are completed for the period 2013 thru 2015.

• The net increase in Salaries and Benefits from retroactive pay between2013 and 2015 after contract negotiations was $14.9 million or 4%.

• Going forward in 2016, the net increase from retroactive pay between 2015and 2016 is $27.8 million or 11%.

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Revenue – General Fund

5 *Unaudited **BudgetedDollar amounts are in millions.

R e c e s s i o n S t a t e C u t s / Ta x B u i l d U p



Prosperity Recovery and Growth



Expenditures – General Fund

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*Unaudited **Budgeted

Dollar amounts are in millions.



Cost increases for the 2016 budget

• Salaries & Benefits $27.8 million

• Justice Center Maintenance $ 6.0 million

• Health Care $ 3.4 million

• Projecting a 9% increase in cost due to increase in claims (older

employee base)

• DOJ Consent Decree Compliance $11.0 million

• Civil Service Testing $700K

• For Police and Fire entrance exams to maintain current workforce levels

• Republican National Convention

• Anticipated prep costs and cash flow support for safety and security,some of which will be reimbursed.

• Possible legal settlements

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DOJ Consent DecreeCost Estimates

Upfront Estimated Costs –

2016 – Community Police Commission $ 755,210

– Training Requirements $ 2,927,319 – Crisis Intervention Program $ 216,323 – Internal Review and Accountability $ 1,165,056 – Equipment and Personnel $ 1,098,500 – Recruitment Plan $ 537,786

– Monitor $ 1,100,000 – Information Technology Support $ 2,687,554 – Departmental Operating Expenses $ 120,753

– Total Upfront Est. Costs $10,608,501

Annual Estimated Reoccurring Costs – Beginning 2017

– Community Police Commission $ 782,117 –

Training Requirements $ 966,015 – Crisis Intervention Program $ 220,649 – Internal Review and Accountability $1,188,357 – Equipment and Personnel $1,500,000 – Recruitment Plan $ 554,494

– Monitor $1,050,000 – Information Technology Support $ 747,500 – Departmental Operating Expenses $ 126,791 – Total Annual Est. (Reoccurring) Costs $7,135,922

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Key revenue losses 2016

Source Amount

Estate Tax $180,000

Fines & Forfeitures $1,200,000

Local Government Fund$1,486,000

Building Permits * $637,000

Property Tax $1,750,000

TOTAL $4.942,000

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* Building Permits revenues dropped from 2015 to 2016 because contractors

pulled the permits in 2015 in anticipation of the RNC.



Carry Over Balance

11 *UnauditedDollar amounts are in millions.

R e c e s s i o n S t a t e C u t s / T a x B u i l d U p



Estimates for Fiscal Year 2016

Beginning Balance $42,096,566

Revenue Estimate* $525,371,291

Total Resources $567,467,857

Expense Estimate $566,745,503

Projected Ending Balance $722,354

12 * Revenues are the same as they were in 2010.



Thank you

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mayor's budget estimate january 2016

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